Monday, March 7, 2011

Spreadtrum Communications (SPRD) Beats Expecations by 4 Cents, Raises Future Revenue Guidance Significantly

A very nice earnings report from old friend Spreadtrum Communications (SPRD) late last week, along with a big upgrade in revenue guidance - frankly I am surprised the stock only gained 6% (it was up some 12% in after hours Thursday night)   The stock obviously stalled at an almost identical place as the mid February intraday high.  This makes it tricky; one would probably like to buy in any 'gap filling' moment, and/or at a new high - currently it is sort of in no man's land.

The main worry here is the product mix as China (and other emerging markets) move to 3G.  Spreadtrum seems to be growing leaps and bounds in the older technology interfaces - but hard to know the competitive landscape in the newer generation build.
  •  Sales of wireless chips by unit volume rose 46% from Q3 for chips serving “2G” and “2.5G cellular connections, the company said. Sales of chips for 3G connections rose 7% from quarter to quarter. Average selling price was down 2% from Q3 and down 26% from the prior-year period.

But for now that is an issue for another quarter as there seems to be enough global landscape in 2 and 2.5G, as the guidance raise was significant.
  • For the current quarter, the company sees revenue in a range of $130 million to $135 million, beating the average $109 million estimate.
An interesting blurb by Needham as well late last week:
  • Needham & Co.’s Quinn Bolton today reiterated a Buy recommendation on Spreadtrum and a $30 price target, writing that the ability of its chips to support phones with multiple “SIM” cards is helping Spreadtrum to expand in India, Africa and Latin America.

Via AP:
  • Spreadtrum Communications Inc., a Chinese company that makes semiconductors for wireless devices, on Thursday reported fourth-quarter results that beat analysts' expectations as sales of its 2G and 3G chip products jumped.
  • Spreadtrum said it earned $30 million, or 56 cents per share, compared with $1.4 million, or 3 cents per share, in the fourth quarter of 2009.  Excluding one-time items, the company said it earned 61 cents per share. Analysts polled by FactSet expected 57 cents per share on that basis.
  • Revenue tripled to $126.5 million from $42.3 million in the same quarter in 2009, topping analysts' estimates for $123.5 million in revenue.
  • Fourth-quarter operating margins at the Shanghai-based company rose by 16 percentage points to 22.3 percent,. 
  • For full-year 2010, Spreadtrum earned $67.2 million, or $1.28 per share, compared with a loss of $19.3 million, or 43 cents per share, the year before.  Revenue more than tripled, rising to $346.3 million from $105.1 million in 2009.

[Nov 18, 2010: Boggling Reaction to Great Earnings Report from Spreadtrum]
[Aug 13, 2010: Spreadtrum Communications with Big Beat but Hostage to the Market]
[May 27, 2010: Bookkeeping - Beginning Spreadtrum Communications]

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